By Ambar Warrick
Investing.com-- Chinese stock indexes rallied further on Wednesday amid increased speculation that the government will tone down the strict zero-COVID policy that has roiled the country’s economy this year.
The bluechip Shanghai Shenzhen CSI 300 index rose 0.8%, as did the Shanghai Composite index. Both indexes rallied 3.6% and 2.6% respectively on Tuesday, on rumors that Beijing was considering the loosening of some COVID restrictions in the country.
Bargain buying also played a role in the equity rally, with the CSI 300 index recovering from a 31-month low.
Hong Kong’s Hang Seng stock index also benefited from the rumors, rallying 5.2% on Tuesday and rising 1.7% on Wednesday. The index recovered from a 13-year low.
Speculation over the scaling back of the zero-COVID policy was driven largely by rumors circulating on social media. Some reports suggested that Beijing was considering the move due to widespread public rhetoric against the policy, as well as damage to the economy.
The country allegedly intends to reopen by March 2023, and is expected to hold a meeting on Friday to decide on the first steps of the matter. Reports on Wednesday said the country plans to first reduce quarantine times, reopen international flights and delegate more power over COVID measures to regional authorities.
Still, Chinese government officials have so far denied such a move. President Xi Jinping, who recently secured a third consecutive term in power, also reiterated that Beijing has no plans to scale back the COVID policy.
China’s zero-COVID policy is at the heart of the country’s economic woes this year, as a series of lockdowns in major industrial hubs ground economic activity to a halt. The yuan also suffered heavy losses on the slowdown, and traded near 15-year lows this week.
Concerns over a new batch of lockdowns also roiled Chinese markets in October, following fresh outbreaks in financial capital Shanghai. Business activity data released this week showed that the Chinese economy remained under pressure despite a recovery in the third quarter.